Even if it’s 2020, in marketing, we still sometimes use a 60 years old concept to explain how things should work. But how correct is that?
To get more to the point, how accurate are the 4Ps and the marketing mix these days?
How good a framework is it for tech and digital companies? Does it cover all the challenges and the areas companies need to decide on in order to be competitive?
Why 4Ps of marketing need a refresh
After working for a while with Saas products, I realized that the 4Ps model doesn’t cover all the elements for digital products. And, if it does – it’s not comprehensive enough. Place – just selling online, for example, is too broad for digital products.
Besides that, what is ‘product’ in the digital world? it might take a while to define the final version. Startups especially are famous for pivoting: shifting the original business model or product according to direct or indirect feedback. Instagram started as a Burbn, a mobile check-in app. The founders rebuilt the product after they noticed that sharing photos with filters was the most used feature in the app. (source)
What’s more, the 4Ps were invented some 30-40 years before the internet happened. Since then, the lines between physical and digital got blurred, as some companies have digital and technology embedded in what they offer. Take Lyft, for example. The service needs the app to run. Without digital, the business probably wouldn’t exist.
What are the 4Ps of marketing again?
Also known as the marketing mix, the 4Ps is a model for building marketing and promotion strategies. It refers to a set of “set of marketing tools that the firm uses to pursue its marketing objectives in the target market”. (source) These are:
- Product: what you’re selling, can be an actual product or a service.
- Price: how much you charge for a product. This often takes into account promotions, discounts, and special offers.
- Place: where you will sell this product. It includes all distribution channels, online and offline. Offline it includes details about what stores, under what conditions and how you can ensure distribution to those stores.
- Promotion: how you will promote your product. Traditionally, this referred to sales, advertising, PR, CSR events and actions. On a more conceptual level, it includes branding.
First published in 1960, the 4Ps was the dominant framework for making marketing decisions for the better part of the 20th century. In the 1990s, as the focus moved on to customers, the framework got a new interpretation. This is how the 4C came about: consumer, cost, convenience, and communication.
(I don’t want to bore you with more on this topic. Google currently indexes 274.000.000 results on the 4Ps and its history, how it came about – so here’s a shortcut to those if you want to learn more about this.)
The first time I came across this concept was in university, sometime around 2007-2008. And it made sense for what was happening back then. Advertising still had some of its glamour, PR was posh, and digital was getting started. You had a product, you sold it in specific places for a specific price and you promoted this.
What a reinterpretation of the 4Ps should cover
There are two big shifts to consider here. First, products are more than just products – a product is currently an experience, a set of interactions between customers and companies. It starts before buying a product or a service and it continues after purchase.
Second, technology started playing an active role in the success of a business.
Given those two shifts, this is how the 4Ps could be reimagined:
1. People
A product or service is nothing without the people who buy it. Now more than ever, people should come first. Because often, they’re the ones who indirectly decide whether a company stays in business or goes bankrupt. They decide what they spend money on.
When I say ‘people’, I don’t mean only demographics. ‘People’ represents a target audience that has a need or a want for your product. They can be of different ages, genders, and interests as long as they share points of view and a need for what you’re offering.
There is a trick here, however. Businesses need to identify a group large enough to make a business viable. If they’re serving a very small niche without any growth potential, it could be tough to keep things running.
2. Value
I was tempted to keep using ‘product’ here. But people don’t necessarily buy a service or a product, they buy the value which that specific product or service provides.
A key point to understand here is that value is strongly connected to people’s needs and wants. Often, it stems from solving customer problems and needs. The bigger the problem, the bigger the need for a solution. Conversely, a product or a service can be an amazing value from a number of perspectives. Yet if no one wants it or needs it, it’s all in vain.
But that’s not to say that value lies in building up specific features. It lies in the benefits created by those features. Take Netflix for example. Beyond TV shows, documentaries and movies, Netflix is about entertainment that’s accessible from any device, at any time.
Additionally, value is relative to the people a product it was intended for. The question isn’t so much as to what you’re selling, but more like what you’re selling and for whom? You could have a large segment of people who want to buy a home. But surely, singles will have different expectations and needs than families, for example.
To be relevant, businesses need to provide more than just a product or a service, they need to provide value. Also, value might change in time and businesses should find ways to accommodate and answer those changes.
3. Technology
Whether it’s a digital product or whether it’s used to acquire and retain customers, technology has become a part of business.
If you think this isn’t important, think of how many companies are still in business and running on Flash. Exactly 🙂 Even if Flash didn’t suddenly die in 2007 as Steve Jobs predicted, Mozilla pulled the plug when it decided to block it after discovering serious vulnerabilities in 2015. Basically, if your product ran on Flash, you slowly go out of business.
Another great example is Google. While it wasn’t the first or the only search engine on the market, Google became the market leader because it returned the most relevant results. And it still does that – even if the volume of crawled data increased considerably from 1998. To keep up with this and other challenges, the algorithm was rewritten at least 2 times (source) and it keeps being improved.
Success doesn’t depend only on the value delivered to a big enough group. It also depends on how fast, accurately and error-free that solution is. The most well-designed product will flop if it works slow, if it keeps asking users for information or if it does not come with adequate data protection protocols.
The key here is to keep an eye on performance and on how technologies evolve. What works smoothly today might not work as well when the number of users or the amount of data collected increases.
Think of it from a people perspective: would you stay and wait for a program to load? Would you stick with a program that usually fails tasks you’re supposed to do with it?
4. Promotion
In order to get to the people it was designed and built for, a product or a service needs to be promoted. This matters even more when markets start getting crowded and it’s hard to tell how two competing services are different.
This element still stands strong, even if it has undergone a few big changes:
- New channels: Digital opened up new ways for businesses to reach an audience. Consider social media, email marketing, content marketing, and native advertising.
- Advertising overload: Currently, the average person is exposed to about 5000 each day (source). I don’t know the exact numbers for ads in the 1990s, but I doubt they were this much. Currently, we have ads at almost every click.
- Customized messages across channels: Marketers currently have a wide number of channels, each with its own specific qualities. Also, they get considerably more control over what message gets displayed where.
Making sure that your audience hears about you is as essential as ever. Even more, if you consider the availability bias.
Promotion should be about communicating the value businesses create for a specific segment, not for all their customers. It should highlight the benefits it brings to users, not its features.
Does one size fit all in marketing?
Given this reinterpretation, let’s see how well that answers the original question. How accurate is the 4Ps, a 60-year-old model for marketing today?
And then it occurred to me that maybe that’s not the right question to ask.
Yes, marketing has changed considerably in the last 60 years. But then again so has business.
Up until the early 2000s, most companies generated revenue by selling either services or physical products. Google and Yahoo! were among the first companies that generated revenue through digital products and services. Basically, these opened up a whole new type of business, with an entirely different model. And since then we’ve seen a constant increase in the number of such companies.
But that doesn’t mean that traditional companies are dead. As recent history shows, digital to consumer business models are facing challenges. Check out Casper’s story. It started out as an online distribution for mattresses, but the company recently expanded into traditional distribution channels to continue its growth. Mark Ritson has a brilliant article on this on Marketing Week (requires a login, but it’s well worth the read)
Maybe it’s time we applied some of our own techniques and segment companies according to business type and model. One size does not fit all here. Putting everything in the same bundle doesn’t make sense because digital companies operate and serve customers differently than traditional ones.
To sum up
The bigger thing to realize here is that different companies with different business models need different models to succeed. What worked for Pepsi might not work as well for Google, for example.
On top of that, physical, traditional businesses have hundreds of years of history and examples. Digital ones, on the other hand, have 20-30 years at best. It will take a while until we have a valid framework, backed by enough data for those.
Until then, to end on a very philosophical note: to know where you’re going, you have to understand where you’re coming from.
Photo by NordWood Themes on Unsplash